PC Jeweller Ltd Results Presentation August 10 th, 2018
Safe Harbor This presentation and the accompanying slides (the Presentation ), which have been prepared by PC Jeweller Limited (the Company ), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed informationabout the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from,thispresentationisexpresslyexcluded. This presentation contains certain forward looking statements concerning the Company s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statementsmadefromtimetotimebyoronbehalfofthe company.
PCJ - Snapshot Consolidated (Rs. crores) FY13 FY18 Growth Multiple # of Cities 23 73 3.2 # of Stores 30 92 3.1 Area (sq ft) 1,64,572 4,19,963 2.6 Domestic Sales 2,987 6,522 2.2 Revenue from Operations 4,018 9,616 2.4 EBIT 375 758 2.0 PAT 291 536 1.8 Networth 1,389 3,881 2.8 BV / Share 98 EPS 14
How Gold Loan Works Fund Based Utilised for Diamond Purchase + Liquidity Management Requirements 1. Promoter s Guarantee 2. Collateral 3. Lien over Assets Working Capital Limits Non - Fund Based Interchangeable SBLC 110: 100 Gold Loan Limits + Cash Margins Gold Loan Gold Loan availed reflects as Trade Payables on the liability side of the balance sheet and as Inventory on the asset side. Gold Loan is a very good hedging tool which protects the company from gold price volatility. Domestic : 180 days repayment period Export : 270 days repayment period
Debt Reduction & Cash Position Debt Position Standalone (Rs. Crores) 31 Mar 18 30 Jun 18 Cash Position Standalone (Rs. Crores) 31 Mar 18 30 Jun 18 Total Bank Exposure (including gold loans) 4,490 4,064 FDs 908 812* FD Lien 217 168 Funds Returned to Banks 426 Cash On Books 366 182* Total Cash on Books 1,491 1,162 PCJ has voluntarily repaid bank debt of Rs 426 crores in Q1 FY19 * We propose to utilize these funds to further reduce our Bank liabilities to less than Rs 3,000 crores by September end.
Key Balance Sheet items Liabilities Standalone (Rs. Crores) 31 Mar 18 30 Jun 18 Liabilities Total Bank Exposure (including gold loans) 4,490 4,064 Less: Cash Margin 1,125 980 Net Liability towards Banks (A) 3,365 3,084 Assets Standalone (Rs. Crores) 31 Mar 18 30 Jun 18 Inventory 5,161 4,842 Operational Creditors 96 201 JFL 141 171 Other Liabilities (B) 237 372 Total (A) + (B) 3,602 3,456 Networth (C) 3,926 4,074 PCJ has reduced its bank liabilities from internal accruals and better realisations from inventory
Note on Exports PCJ Export Manufacturing Unit Export Manufacturing Unit NOIDA SEZ Banks Copy of Export Docs Shared with Bank Customs Authorities Every export consignment is assessed & checked Order for traditional gold jewellery designs targeted at Indian diaspora / local population in middle east markets Payment as per due date Dealers / Wholesalers Shipment by PCJ PCJ Exports traditional gold jewellery to wholesale buyers in Dubai
Audit Process The Company undergoes a rigorous audit process along with other items for stock, cash, receivables and payables at stipulated intervals by (1) Statutory Auditors (2) Stock Auditors appointed by Bank every quarter and (3) Internal Auditors. Statutory Auditors Stock Auditors Internal Auditors Audit at year end Limited Review every quarter Quarterly Quarterly Verification of Physical inventory by direct site visits Quality verification by gemmologist Verification of Cash & Bank Balances by obtaining balance confirmations directly from all the Banks Obtaining balance confirmations directly from all the major debtors & creditors. Verification of documents trail Verification of physical inventory by site visits. Verification of Hall Marking Quality check by independent gemmologist Verification of physical inventory by site visits. Verification of Hall Marking Checking of various reconciliations (e.g. bank reconciliation, credit card proceeds reconciliations etc.) Verification of Company s books Verification of Books at the showroom level as well as physical cash verification, physical verification of company s fixed assets Verification from Company s books. Scrutiny of documents Checking of compliance with various laws (e.g. proper statutory deductions such as TDS/TCS, proper deposit of GST etc.). Scrutiny of vouchers for their compliance with delegation of powers/approving authority. Statutory Auditors are Walker Chandiok & Co.
Strategy for FY 19 Strategy Focused targeting and expansion of customer base New customer acquisition channels : Online Gift cards Redemption of online gold balances Bank card partnerships Enhanced customer experience : augmented / virtual reality, refurnished stores FY19 is likely to be a year of consolidation for industry at large PCJ will focus on stronger branding, customer acquisition & same store sales growth along with expansion of franchisee network
Quarterly highlights Q1 2019 Sales : Rs 2,423 crores (14.4% growth over Q1 2018) Q1 2019 EBITDA : Rs 281 crores (9.1% growth over Q1 2018) Q1 2019 PAT : Rs 142 crores (4.5% growth over Q1 2018) Q1 2019 PBT : Rs 194 crores (1.8% growth over Q1 2018) Q1 2019 Domestic Retail Sales : Rs 1,616 crores (16.8% growth over Q1 2018) Q1 2019 Export Sales : Rs 807 crores (9.7% growth over Q1 2018)
Financial Updates
Highlights: Overall Business Particulars (Rs. Crores) Q1 FY 2018 Q1 FY 2019 Revenue from Operations 2,119 2,423 Domestic Retail 1,383 1,616 Exports 736 807 Gross Margins (%) 14.4% 13.1% Domestic Retail 19.4% 15.9% Exports 5.0% 7.5% Expenses (% of total Revenue) Employee Expenses 1.0% 1.1% Advertisements 0.3% 0.4% Other Costs 2.0% 1.3% Other Income 1.0% 1.3% EBITDA Margins 12.1% 11.6% PBT Margins 9.0% 8.0% PAT Margins 6.4% 5.9%
Highlights: Domestic Retail Particulars (Rs. Crores) Q1 FY 2018 Q1 FY 2019 Revenue 1,383 1,616 Gross Margins (%) 19.4% 15.9% Expenses (% of total Revenue) Employee Expenses 1.4% 1.4% Advertisements 0.5% 0.6% Other Costs 2.9% 1.6% Other Income 1.0% (0.2%) EBITDA Margins (%) 15.6% 12.1% PBT Margins (%) 12.3% 10.1% PAT Margins (%) 8.8% 7.1%
Highlights: Export Business Particulars (Rs. Crores) Q1 FY 2018 Q1 FY 2019 Revenue 736 807 Gross Margins (%) 5.0% 7.5% Expenses (% of total Revenue) Employee Expenses 0.3% 0.6% Advertisements - - Other Costs 0.1% 0.7% Other Income 1.0% 4.4% EBITDA Margins (%) 5.7% 10.6% PBT Margins (%) 2.7% 3.7% PAT Margins (%) 1.9% 3.3%
Business Updates
Business Updates for the Quarter The business environment remained tough during this quarter and there was an overall decline in the industry. The company s emphasis therefore remained on customer acquisition even at the cost of margins. Accordingly it ran two promotional Schemes during this quarter and was successful in gaining market share. This coupled with reduction in the diamond jewellery sales percentage has resulted in lowering of gross margins in the domestic segment. In the export segment the gross margins have increased by more than 2 %. However, this increase is due to increase in lease cost as well as hedging costs ( Go Fo) which the company recovers from its buyers and which gets built up in the sale price of jewellery and gets reflected in the higher Gross margins. However, this extra margin does not come in the company books but gets included in finance costs.
Business Updates for the Quarter The Re depreciation during the quarter has resulted in the positive MTM which has increased the export margins at the EBIDTA level by nearly 4% The Re depreciation however has had a negative impact on the domestic EBIDTA margins and the negative MTM has depressed the margins by approximately 1.05%. There is an absolute increase in the quantum of finance cost, but as explained above the company s finance costs also includes the lease charges on the MGL as well as hedging costs (Go Fo) which has increased the same in the export segment. There is no increase in the finance costs of the domestic segment on QoQ basis and a decline between Q4 of FY 18 & Q1 of FY 19. The company operates through its retail stores and there is a constant monitoring of individual store performance. This monitoring of store performance has resulted in changing the store format from small to large like in its Ghaziabad Store, reducing the store size and shifting to a different market with more customer footfalls like Rajouri Garden (Delhi), Hyderabad, Jodhpur. Company has also shut down its stores at Bengaluru and Kolkatta. The company will carry on this store rationalization exercise in future as well. The company has opened two franchisee stores at Pune & Hyderabad in the month of April 2018.
AZVA - Boutique Designed by Italian Architects, first flagship boutique of AZVA is now operational at the Taj Santacruz, Mumbai.
Successfully running collection LAL QUILA
Successfully running collection LAL QUILA
New Showrooms (already opened in FY 19 till now) Pune, Maharashtra Hyderabad, Telangana Deoria, Uttar Pradesh
For further information, please contact: Company : Investor Relations Advisors : PC Jeweller Ltd CIN: L36911DL2005PLC134929 Email: investors@pcjeweller.com www.pcjeweller.com Strategic Growth Advisors Pvt. Ltd. CIN: U74140MH2010PTC204285 Mr. Rahul Agarwal/ Mr. Shrikant Sangani rahul.agarwal@sgapl.net / shrikant.sangani@sgapl.net www.sgapl.net